Once Upon an IPO

  • Posted by
  • on May 21st, 2011

It was 1998, and as far as I was concerned the NASDAQ bubble was popping.  Something called theglobe.com was coming public weeks after the wicked bear market that had felled those smarties at LTCM.  Priced at $9, I pretty much snorted my drink through my nose when I heard $TGLO might open above $50.  How could I not short this thing?

I wouldn’t know the date without looking it up, but boy do I remember that day in Boca.  I couldn’t throw out a 1000 share sale on Instinet fast enough; I’d have to check my notes but it was high 70s for sure.  I think by the time I filled out the rest of that pink ticket it was printing above $90 and my organs were shaking.  Then it ran through par, are you f*%#ing kidding me?!  This was my money…or perhaps was is a better use of italics.

Around $105 it seemed to lose some steam, and I shorted another 500 to “bring my average up”.  My god, I can’t believe I ever used those words, but I was a little young and, um, misguided.  I think it ran another 8 points while I went for a walk, as my breathing came off its frenzied pace I got a little more cool-headed and started throwing in crazy orders to buy it back.  300 at $98 in case some stops got hit below $100.  Another 300 just above $90 in case it really got “killed”.  It was back in the 70s so fast even an idiot like me could get out with no damage.  I took off another 300 somewhere below $80 and let the rest ride, covering 300 at the end of the day in the mid 60s and the rest into the next day’s selloff somewhere near $57 as I recall.

Good trade, huh?  Winning trade, yes.  Good trade, no!  I honestly think it was the last IPO I shorted, lesson learned and lucky to have not been busted from the experience.  It was the height of arrogance and stupidity, and I survived.  People who didn’t trade that era think we all just “rode the wave” up, but I know many who made more money shorting than buying.  It was the volatility and, more importantly, public participation that made the era so lucrative.

Fast forward to Thursday.  I had no interest in watching $LNKD.  I think that team deserves credit for building what they did; it must be sweet vindication for the folks there to see their hard work monetized rather than mocked as it has been by the peanut gallery.  I hope they kick ass, they built something sturdy enough to survive massive change and lived to cash in.  I had no way to play, no way to do any of the following:

1) Set a position size

2) Set a stop

3) Set a target

I can’t place a trade without any of those, so why watch?  Forget rationality, these stocks are moved by emotion.  If it was crazy at $45, then $85 was even more crazy but one could have made 50% in a few hours from there…nice work if you can get it.  If there is a trade in $LNKD, it will show up as one idea of many in my history.  Maybe the equivalent of shorting $TGLO after it got boring rather than in the frenzy.  It won’t be as memorable, but I’m not looking for memories I’m looking for profits…a small edge repeated over and over again if I stick to my plan.  The transition from know it all to know nothing has been a long journey; I’ll let you know when I make it to the end.

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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